Day of Reckoning for Day-Trading Firms?: Regulators, alleging fraud and other problems, are cracking down on the industry

The day-trading industry began in 1988, when federal regulators changed stock-trading rules to allow individual investors to execute trades on NASDAQ more easily. It really took off just a few years ago with proliferation of firms using new software designed to execute split-second trading. The day traders monitor small price movements in active stocks, trying to profit from changes of as little as a quarter or an eighth of a percentage point. Day traders are a small subset of online traders. Some of the day-trading firms are promoting electronic day trading as a way to make a lot of money. But industry regulators are keeping a close watch on those marketing claims, which sometimes hide the risks.